0:07

This is Macro Voices,

0:09

the free weekly financial podcast

0:11

targeting professional finance, high net

0:14

worth individuals, family offices and

0:16

other sophisticated investors. Macro

0:19

Voices is all about the brightest minds

0:21

in the world of finance and macroeconomics

0:24

telling it like it is, bullish or

0:26

bearish, no holds barred. Now

0:28

here are your hosts, Eric Townsend

0:30

and Patrick Suresna. Macro

0:43

Voices episode 421 was produced on March

0:45

28, 2024. I'm

0:48

Eric Townsend. Forest for the

0:50

Trees founder Luke Grohman returns as this week's

0:52

feature interview guest. We'll discuss the

0:54

dollar, where it's headed both short and long

0:56

term, precious metals, Bitcoin and more. More

0:59

than 80 tickets have already been sold

1:01

for my live presentation on advanced nuclear

1:04

technologies in Sydney, Australia on March 10th

1:06

and early bird tickets will probably have

1:08

sold out by the time you hear

1:10

this podcast. Full price

1:12

tickets should still be available

1:14

at startcon.com/nuclear, which is also

1:17

linked in your research roundup.

1:19

I look forward to meeting some of you in Sydney

1:21

on April 10th. And I'm

1:24

Patrick Suresna with the Macro Scoreboard week over

1:26

week as of the close of Wednesday, March

1:28

28, 2024. The

1:31

S&P 500 June futures contracts were up

1:33

42 basis points to 5308. The

1:37

relentless bullish price action continues. We'll take

1:39

a closer look at that chart and

1:41

the key technical levels to watch in

1:43

the post game segment. The US Dollar

1:45

index up 89 basis

1:47

points to 104.29 breaking

1:49

out towards its February

1:51

highs. The May WTI

1:53

crude oil contract up 10 basis points to

1:56

8135. Old

1:58

dips keep getting bought. As it

2:00

trades along its multi-month highs, we'll take a

2:02

look at that chart in the post game

2:05

and Eric will have the EIA inventory data.

2:07

The May Arbob Gasoline down 184 basis

2:09

points to 267. The

2:14

June Gold contract up 137 basis points to 2212,

2:16

breaking back towards all-time highs. Copper

2:22

down 123 basis points to $4 even. Uranium

2:27

up 6 basis points to $88.55

2:30

and the US 10-year Treasury yield down

2:32

8 basis points trading at $419. The

2:36

key news to watch this week

2:38

is the Friday's Core PCE Price

2:40

Index and next week we have

2:42

the ISM Manufacturing and Services PMIs

2:44

and the jobs numbers. This

2:47

week's feature interview guest is Forest for the

2:49

Trees founder Luke Roman. Eric, why did we

2:51

invite Luke back on the show as a

2:53

guest this week? Well Patrick,

2:56

for as long as I've known

2:58

Luke and been interviewing him here

3:00

on Macro Voices, I've always said

3:02

that I am personally convinced that

3:04

Luke will be proven right in

3:06

the end on his views that

3:08

the US dollar would eventually lose

3:10

its reserve currency status and make

3:12

a sharp move lower against other

3:14

currencies. At the same time,

3:16

I also was very vocal in saying

3:19

that I think Luke is way ahead

3:21

of the market by several years. Well

3:24

Patrick, I think the Luke Roman

3:26

moment is finally approaching. I'm not going

3:28

to say it's here yet but where

3:30

I used to say, okay, Luke will

3:32

be right someday and years into the

3:34

future but not yet. Okay, I don't

3:37

think it's years and years into the

3:39

future anymore. I think it's coming up

3:41

so I wanted to get an update

3:43

on what Luke thinks is happening and

3:45

where we're headed in terms of his

3:47

hypothesis that eventually the US dollar will

3:49

lose significant ground against other currencies as

3:51

its reserve currency status is challenged. Well,

3:54

Eric's interview with Luke Roman is

3:56

coming up as Macro Voices continues

3:59

right here. And

4:10

now with this week's special guest,

4:13

here's your host, Eric Townsend. Joining

4:18

me now is Forest for the Trees founder, Luke

4:20

Groman. Luke, it's been quite a while. We haven't

4:22

seen you since October. I'm really looking forward to

4:24

catching up. It feels to me like a lot

4:27

of what you said last time we had you

4:29

on has started to play out and frankly, as

4:31

we go to a bigger picture, it feels to

4:33

me, since I've been talking to you for I

4:36

don't know how many years now, I've been waiting

4:38

for the day that Luke Groman starts to be

4:40

proven right on the dollar. It hasn't really happened

4:42

yet in the sense of the dollar outright failing

4:45

or crashing. But boy, it sure seems

4:47

like the leaks and the dam are starting to

4:49

show. Do you see it that way? And if

4:52

so, what do you see coming next? Thanks

4:55

for me back on, Eric. You

4:57

know, I was on the last

4:59

time we talked was October 5th of

5:01

last year. And we finished up that

5:03

show. I said the short

5:06

run outlook, dollar up rates up feedback

5:08

loop, isn't going to be broken

5:10

unless the fed significantly or unless the dollar

5:12

is significantly weakened, excuse me. And to be

5:14

clear, that could be the fed or the

5:17

treasury. And then I also said,

5:19

hey, oil's probably got to be weakened meaningfully as

5:21

well. And so a view coming out

5:23

of that conversation was that

5:25

before too long, fed or treasury

5:28

one way or another are going

5:30

to need to resume financing US

5:32

deficits and they can call it yield curve control, they can

5:34

call it QE, they can call it not QE. We're

5:37

only doing this to help the resilience of the treasury

5:39

market. This isn't QE, whatever they want to call it.

5:42

That's what they're going to call it. But that's what's going to happen is

5:44

what I said. Then I said, once they

5:46

do that, I'd encourage people to call it the

5:48

stock chart of the Argentine stock market. You know,

5:50

yeah, the peso has been a disaster, but in

5:52

peso terms, the stock market's up like 5X in

5:54

like three or four years. And I think the

5:56

same thing's going to happen here except it'll happen in

5:58

dollar terms. So, you know, dollar. not going to collapse

6:00

against a peso, but it's

6:02

going to be really good for stocks, it'll be good

6:04

for gold, and that's when you'll see gold performance when

6:06

you see Bitcoin really performance. So that's what we finished

6:08

up with on October 5th. And so the

6:11

short term was like, okay, you've

6:13

got this dollar rate feedback that

6:15

was happening. I didn't realize

6:17

how short term short would be, to be honest. The

6:20

very next day, you had the

6:22

first of seven Fed speakers over the next

6:24

10 trading days start

6:27

to job on the dollar down. And

6:29

it was like they all had received a

6:31

talking points memo saying the bond

6:33

market has done our job for us.

6:36

The bond market has done our job for us. It was like going

6:38

to church when I was a kid. It was like a

6:40

chant. And two

6:42

weeks later, we wrote a report for

6:44

clients that said Fed just touched off

6:46

third instance of treasury market dysfunction in

6:48

past 13 months, US

6:51

dollar liquidity cometh. That's

6:53

what the title of the report was on October

6:55

17th for clients. And I

6:57

said, look, Fed has driven treasury

6:59

market dysfunction again. And

7:01

right on cue, it appears the Fed's begun job

7:03

owning the dollar down. So if

7:05

we're right, we could see a repeat of the liquidity injections we saw

7:08

in March of 23, September of 22, March of 20, September of 19.

7:12

And a lot of investors seem offsides for that. So it

7:15

feels like that particular report and

7:17

point as a follow on to what

7:19

we had talked about two weeks earlier

7:21

on the show bore

7:24

out pretty well. I said, look, this is going

7:26

to be really bullish for gold, Bitcoin, oil, commodity

7:28

stocks, inflation. So not

7:30

only did we get that in

7:32

terms of the Fed job owning,

7:34

but then on November 1st, we

7:37

had yelling shifting issuance from

7:40

the long end of the front end, much more

7:42

than people expected. When you look

7:44

at the effects of what yelling did, it

7:47

was effectively QE. In other words,

7:50

if you look at QE historically, what

7:52

happens is you have a reduction in

7:54

duration issuance, you have an increase in

7:57

liquidity, you have an increase in bank

7:59

resistance. reserves and you

8:01

have a loose financial conditions and stocks

8:03

out. And so what Yellen

8:05

did by shifting along into the front end

8:07

by tapping the reverse repo, same

8:10

dynamics. Reduction in duration

8:12

issuance, bank reserves up,

8:15

financial conditions loosened, stocks up,

8:17

reverse repo down. So basically,

8:20

you had the

8:23

liquidity increase that we thought

8:25

would come whenever the dysfunction came in the

8:27

treasury market. Next

8:29

forward to today, is it the moment? I

8:32

think we're getting near the moment

8:34

of whatever it means. To me, what that means

8:36

is ultimately the Fed and

8:39

Treasury are going to have to continue

8:41

to inject dollar liquidity into

8:44

elevated inflation prints, into

8:47

strong nominal growth, into low

8:49

unemployment because

8:52

the Fed made the mistake in 2022 of not letting

8:54

inflation run high or

8:59

for longer. That was their mistake this time. It's

9:01

very ironic. Most

9:03

investors are saying the Fed needs

9:06

to be brave like Volcker. They need to

9:08

be higher for longer. But because

9:10

Volcker was operating with that the GDP of

9:12

35%, today, when the Fed started tightening

9:16

that the GDP of 120%, night and day. To

9:19

be brave this time like Volcker, the Fed

9:21

needed to let inflation run higher for longer

9:23

because they didn't. Now

9:26

they're going to deal with the consequences, which

9:28

is yes, they did generate some near term

9:30

disinflation. Inflation is off the highs. But

9:33

they put the US into fiscal dominance,

9:35

which promises a much worse inflationary outcome.

9:38

So I think to answer your question

9:40

directly, now that the Fed has put

9:42

the US into fiscal dominance, vis-a-vis

9:44

or by virtue of its aggressive rate

9:47

hiking, I think inflation is going to

9:49

continue to pick up. I

9:51

think the dollar will continue to weaken in

9:53

an orderly basis. I don't think it's going

9:55

to be chaotic. I think on an orderly

9:57

basis between now and the election.

9:59

We'll see what happens after the election. Luke,

10:02

one of the challenges of macro investing is

10:04

you have to interpret multiple trends happening on

10:06

top of each other. And something that kind

10:08

of baffles me in all this is

10:11

when we spoke in October, that

10:13

was just two days before the

10:15

October 7th attacks and the beginning

10:17

of the Israel-Gaza conflict. Now normally,

10:19

any kind of big geopolitical conflict

10:21

like that, especially if the US

10:23

is involved in it, is very

10:25

strongly dollar positive. Yet we really

10:27

saw a very strong downtrend in

10:29

the dollar beginning just after the

10:31

October 7th attacks that took us

10:33

down to right around Christmas time was

10:36

when the dollar bottomed. So it seemed

10:38

to me like even in the beginning

10:40

of a new geopolitical escalation, we were

10:42

seeing that dollar weakness, that

10:44

really stood out to me as unusual. Am

10:46

I missing anything? Is there something about this

10:49

conflict that would not have been

10:51

inherently dollar positive? No,

10:53

I think you're not missing

10:55

anything. To me, any conflict in

10:57

theory is going to be dollar

10:59

positive. I think there were two

11:02

things worth noting within that. Number

11:04

one, the treasury dysfunction really kicked

11:06

in the high gear around October

11:08

6th, which

11:10

is to say the move of volatility

11:12

index broke above 135, I think, which

11:15

was the point that Harley-Bassman

11:17

said the year before is when the Fed has

11:19

lost control of the bond market. And

11:22

historically, like I said, we've

11:24

seen five times since 2019,

11:26

any time treasury volatility

11:28

gets too high or starts to dysfunction,

11:30

dollar liquidity is applied very rapidly by

11:33

either the Fed or Treasury or both.

11:35

And so I think factor

11:37

number one is that the

11:40

treasury volatility that was

11:42

going critical on October 6th

11:45

required an immediate

11:48

US policymaker response, which it got first in

11:50

that Fed jaw boning over the next two

11:52

weeks, and then with Yellen shifting issuance

11:54

to the front and then bringing

11:56

the reverse repo balances to bear to finance deficits. I

11:59

think those two. two factors dominated

12:01

the dollar positive dynamics that

12:04

may have, that

12:06

would have normally, I think manifested

12:08

during such a conflict. The

12:10

other thing I think that may

12:13

have been a factor and

12:17

I think continues to be

12:19

underappreciated is that on November 15th,

12:21

President Xi flew to San

12:23

Francisco and

12:25

met with President Biden.

12:30

In my view,

12:32

there is a significant

12:35

non-zero chance that some version

12:37

of the bones of a

12:39

San Francisco accord to weaken

12:41

the dollar were agreed to by those two.

12:44

You can see the dollar weaken

12:46

after that meeting. We

12:49

know multiple high-level Treasury meetings

12:51

where Treasury officials have gone

12:53

to Beijing to

12:56

start this year. We

12:58

know that the conversations that have

13:00

been leaked regarding the topics of

13:03

those meetings are

13:06

in no small part reference to

13:08

trying to prevent the Chinese from

13:10

dumping cheap goods onto global markets,

13:13

which is to me really

13:15

interesting because most

13:18

conversation around the yuan is when is

13:20

China going to devalue the yuan. But

13:24

if the United States is talking to

13:26

China about preventing cheap Chinese goods from

13:28

hitting the market, the United States would

13:30

not be talking to China about a cheaper

13:32

yuan. They would be talking to China about

13:35

making the yuan more expensive, in other words,

13:37

revaluing the yuan higher against the dollar, the

13:39

dollar down, which is what

13:41

the US needs to improve Treasury

13:43

market functioning and to make reshoring

13:45

more economic, et cetera, anyway. I

13:48

think those two factors of

13:51

the Treasury market was in a

13:53

very acute state on October 6th,

13:55

as measured by the move index,

13:58

as measured by the fact that as of... October 6th,

14:00

the TLT, the long bond ETF

14:03

was down 20% in a quarter. And

14:06

in my opinion, others may think differently, but in

14:08

my opinion, if you have an asset that drops

14:10

20% in a quarter, especially one

14:12

as big as the long bond, that's a crash,

14:14

the treasury market crashed in the third quarter. So

14:17

you had a treasury market crash that needed

14:19

instant dollar liquidity as of October 6th. And

14:22

then starting November 1st, you had

14:24

Yellen obviously help with address that.

14:27

But then this November 15th, she

14:29

Biden meeting in San Francisco, I

14:31

think may have been much more

14:33

important for the dollar going forward

14:35

than I think consensus at

14:38

this point has ascribed to

14:40

that meeting. Now, as I

14:42

look at the chart now, the narrative

14:44

doesn't really make sense to me because

14:46

at first I see after we spoke

14:49

and despite the fact that we were

14:51

entering this conflict with Gaza, we

14:53

saw the dollar moving down sharply

14:55

exactly as you anticipated that it

14:57

would that lasted through Christmas. Then

15:00

you see starting just after Christmas,

15:02

this, what looks to me

15:04

like a rebound or relief rally, and I sort

15:06

of think, okay, so we came down quite a

15:08

bit from 106 and

15:10

change down to about a hundred to

15:12

get back up for a

15:14

bounce back, a dead cat bounce to retest

15:16

104, which has been a

15:19

key technical level for years now in the dollar

15:21

index. Well, that made sense. It's sure enough 104

15:24

only lasted for a day or two. Then

15:26

we started trading back down towards 102 and

15:28

I'm thinking, okay, that was just the

15:30

dead cat bounce. We're headed back down from here,

15:32

but just in the last two weeks since the

15:35

beginning of March, we're right back up to 104

15:37

again. And just in the

15:39

last couple of days, we're recording this on

15:41

Monday. So it was a few days before

15:43

our listeners will hear it. Uh, we just,

15:45

uh, on Friday closed above 104 back below

15:47

it at the end of the day on

15:49

Monday. So it seems like we're right back

15:51

up there again. Are we going to see

15:54

further strength before this continues to play out

15:56

further to the downside or maybe what I

15:58

should be asking is, did I correct? interpret

16:00

your prognosis that we were headed still

16:02

considerably lower than a hundred which is

16:04

what we tested back around Christmas time?

16:07

I think we're ultimately headed lower. I think

16:10

it's in everybody's interest for the dollar to

16:12

be weaker. It's in America's interest.

16:15

It's in China's interest. It's in Japan's

16:17

interest. It's in Europe. It's in everybody's

16:19

interest and that's because there's so

16:21

much dollar denominated that outstanding. Declining

16:23

the dollar increases

16:26

global economic activity because

16:29

it makes global dollar denominated debt easier

16:31

to service. It makes

16:33

global as a result global balance

16:35

sheet capacity to buy more treasuries.

16:38

It increases that balance sheet capacity which the US

16:40

needs. It makes the

16:42

dollar more competitive. It makes it easier and

16:44

more stimulative to reshore the

16:47

industrial base which we have begun but

16:50

need to be moving much faster on. I

16:53

think ultimately the deal

16:56

to be had or the deal, the

16:59

bones of the deal is something along the lines

17:01

of what we

17:03

agreed to with

17:06

Japan in the 80s. When

17:08

Japan was beating us up in the

17:10

80s, there's a lot

17:12

of people that say, well China's gonna be

17:14

the next Japan. Okay. In

17:17

the mid 80s, the dollar went from 166 at the peak

17:19

to 85 two years later. A big part

17:24

of how the US sort

17:26

of undid Japan was massively weakening the dollar.

17:28

That's sort of peak dollar. Even if you

17:30

take 120 to 85 over 18 month period,

17:35

still an enormous decline in the dollar.

17:37

Obviously, that was agreed to at

17:39

the Plaza Accord in September of

17:41

85. That dollar moved down started

17:43

in February of 85.

17:46

Somebody leaked it a full six seven months in

17:48

advance that, okay, they're starting to talk about weakening

17:50

the dollar. Same thing here.

17:53

The dollar peaked at 114 in September

17:55

22 after Yellen went

17:57

to the IMF. I guess it was

17:59

early October. October of 22, and Bloomberg

18:01

reported that the number one topic of conversation

18:03

was the dollar. Our

18:05

allies were saying, what are you doing to

18:07

us? You're telling us. Japan, certain European allies,

18:10

et cetera. And she

18:12

came out of that meeting, and immediately, the dollar

18:14

weakened meaningfully. She ran down the TGA aggressively.

18:17

The dollar weakened by a good 30% on

18:19

an annualized basis, I guess 114 to 102, 103,

18:21

if I remember, right

18:24

over the next four months. And that

18:26

was sort of a jumpstart of the

18:28

economy, stabilized the treasury market, stabilized asset

18:30

markets kind of kept everything from getting

18:32

much worse than it was otherwise going

18:35

to be in September. So I think

18:37

what we've seen is, well, what we're

18:39

seeing in real time is a conversation

18:41

between the US and China, perhaps, around

18:43

a San Francisco accord to

18:46

weaken the dollar. And I think the deal

18:48

on offer, the deal that makes sense, is

18:50

we weaken the dollar, we coordinate with China

18:52

to weaken the dollar. Maybe Japan gets involved

18:54

as well, which may tie into some of

18:56

the rate hikes and the ending of

18:58

yield curve control. Who knows? But

19:00

we weaken the dollar, notably, and

19:04

we allow China to buy oil

19:06

from the Saudis and Yuan. Recall,

19:09

there were Yuan swap lines signed between the

19:11

Saudis and Chinese late last year. That

19:13

way, when the dollar weakens, the rising

19:15

dollar price of oil doesn't break China,

19:17

as it otherwise would, because they can

19:19

print Yuan for oil. With

19:22

the corollary that they will buy more

19:24

treasuries as the dollar weakens, which

19:27

helps us, and the

19:29

Saudis will not recycle any

19:33

Yuan into Chinese government bonds. It'll have to

19:35

go into Chinese goods or into gold. And

19:39

I think that's a potential deal on

19:41

offer. I don't know. It's speculation. It's

19:43

informed speculation. That's what

19:45

I think would make sense,

19:47

and I think ultimately is in the interest of

19:49

the United States and of everybody else to have

19:51

a managed decline in the dollar over the next

19:54

9 to 12 months. Let's talk

19:56

about how this has transmitted to precious

19:58

metals, because it would... kind of

20:00

fascinating to me is despite the fact that

20:02

I think you've got the dollar story right,

20:06

and we did see some strength and

20:08

precious metals. Gold was up during that

20:10

period from October. I think it was helped

20:12

both by the dollar and the escalating

20:14

geopolitical situation. But then, you know, gold

20:16

was really kind of struggling for a while

20:18

and it wasn't until Waller's comments about

20:20

shifting the focus of the Fed's activity

20:22

from the back end to the front end

20:25

of the curve that gold really went

20:27

through the roof. I do

20:29

understand the basic concept there, but you know, 150 bucks

20:31

up on gold in

20:33

just a few days. When we weren't talking

20:35

about a structural change in interest rates, we

20:37

were only talking about where on the curve

20:40

the Fed's activities are. I wasn't

20:42

expecting that. Is there more to that

20:44

story that I'm missing or how do

20:46

you interpret the response of precious metals,

20:48

particularly gold, to all of this activity

20:50

we've been discussing? I think

20:52

it's probably a couple things to that, at

20:54

least as far as how I'm thinking about it.

20:57

The first, to your point, Waller's comments, I

20:59

think were pretty important around

21:02

the front end, shifting more to the front

21:05

end. Ultimately, that is

21:07

a more inflationary policy, in

21:09

my view. You're getting

21:11

involved in more cash-like instruments

21:14

at the front end than you are at the

21:16

long end. I think also right

21:18

around then, in the first week

21:21

of December of March, you

21:24

had ISDA, the securities deal, as proxy

21:26

for the too-big-to-fail bank, send

21:29

a letter to the Fed, the

21:31

FDIC, and the officer of the

21:33

control of the currency, the OCC,

21:36

asking for a permanent

21:39

exemption to bank SLR, supplementary

21:41

leverage ratio calculations for

21:43

treasuries. In other words, the

21:46

banks were asking the Fed,

21:49

the FDIC, and the OCC to

21:51

re-grant them a power they had for just a

21:53

limited period of time from April of 2022. twenty

22:00

two april or my may

22:02

of twenty twenty one so basically. Thank

22:06

you for your exemption

22:08

for treasuries it

22:10

sounds really technical here's what it

22:12

is. It gives

22:14

the banks to buy an

22:17

unlimited infinite amount of treasuries.

22:20

With no capital requirements it is

22:22

q e done through the

22:24

bank that's it. Add

22:26

to me i think that has

22:29

at least as much to do

22:32

with the jump in gold as walter's

22:34

comments. For two reasons number one

22:36

the fact that the banks are writing this letter.

22:40

Tell you that they're starting to choke on

22:42

treasury supplies they need relief. And

22:45

number two the fact that they're asking for

22:47

this pretty much everything the big banks of

22:49

ever wanted the fed gives them eventually. And

22:52

then you also had powell to that

22:54

end talking his testimony right around that

22:56

same time. About basically

22:58

revisiting the bottle regulations in fact

23:00

bloomberg reported exactly that the big

23:03

banks had one a major

23:05

victory on capitol hill by

23:08

deferring. The

23:10

capital requirements so yes

23:14

i think part of it was wall and

23:16

i think that was important but i think

23:18

married as well with the bank saying we

23:20

want a permanent. Exemption

23:23

for treasuries to our l r

23:25

calculations that means the bank they

23:28

basically borrow it zero and they can buy

23:30

treasuries at. Five and a quarter

23:32

at the front end for a quarter at the back

23:34

end and you call how many treasuries

23:36

with the bank by five you know if

23:38

they find it zero and can. I'm

23:41

at five and a quarter four and a quarter whatever

23:43

along the curve in the answer is like. A

23:47

lot right it's a very nice little

23:49

margin net interest margin when you're finding

23:51

it zero and you're crazy at that

23:54

level so i think that made those

23:56

two factors combined. In

23:58

the context of what. talked about

24:00

to start the show, which is they're

24:02

going to have to do some sort of liquidity, and I don't

24:04

care what they call it, it's QE. This

24:07

is not QE, it's just QE through

24:09

the banks. If you give the banks

24:11

a permanent exemption to SLR for treasury,

24:14

it's QE through the banks. That's it.

24:16

And that's fine. It is what it is. And

24:19

that leads to a very obvious

24:21

set of investment choices, which is the gold's going to

24:23

do well, Bitcoin's going to go to the moon. And

24:26

you can kind of see those, you know, if

24:28

you run a, even long bond

24:30

has been fined, but not

24:33

relative to sort of everything else. And

24:35

so when you look at the S&P 500

24:37

over TLT, over the long bond, like the

24:39

chart just began exploding higher at the end of

24:41

2022, when the dollar peaked and

24:44

rolled over. When you look at

24:46

the S&P industrials over TLT, same

24:48

chart. Gold over TLT, same

24:50

chart. XOP, the oil service

24:52

names, over TLT, same

24:55

chart. CAVE, which is a

24:57

industrial infrastructure ETF over

24:59

TLT, same chart. So to me, it

25:01

is really just sort of this, in

25:04

the stock market, this Argentina with US

25:06

characteristics playbook. We have a fiscal problem.

25:08

It has gone acute. And

25:11

it went re-accu- you know, we had our fifth

25:13

episode of Treasure Dysfunction in four years in September.

25:16

They sort of did some short-term stuff to

25:18

kick the ball into earlier this year. And

25:20

then I think Waller and

25:23

the machinations around whether it's a

25:25

bank SLR exemption for treasuries or

25:27

other changes to the Basel rules, you

25:30

kind of get an idea how the Fed and others are

25:33

leaning, which is it's going to

25:36

have to make it easier and cheaper for

25:38

the banks to finance the government at

25:40

really, really cheap rates. And

25:42

I think that's what we're not only what we saw in

25:45

gold, but I think it's what we're

25:47

seeing in Bitcoin and what we're seeing in markets

25:49

really on a daily basis, it seems

25:51

like now. Let's go a

25:53

little deeper on Bitcoin because even us

25:56

coin skeptics have to admit that the size of

25:58

the move on Bitcoin is a big deal. Bitcoin

26:00

was so much bigger on a percentage

26:02

basis than it was in gold. Is

26:04

that just because there's a generational change

26:07

in everybody's favorite speculative asset for this

26:09

stuff or is there more to the

26:11

Bitcoin story that's independent of monetary policy

26:13

that's been driving this rally? I

26:16

think Bitcoin is obviously way smaller than

26:18

gold. The market cap of Bitcoin is

26:20

whatever, 1.4 trillion

26:22

right now, give or take. Gold

26:24

is nearly 10 times that. I think that's

26:26

part of it. So it's a much smaller

26:28

asset base. Dollars are trying to squeeze

26:31

into. Capital is trying to squeeze into. So I think the

26:33

moves on the upside and downside have been disproportionate.

26:37

I think the other thing is Bitcoin

26:39

does not have nearly the financialization that

26:41

gold has. In other words,

26:43

you've got historically all this unallocated gold

26:45

centered in London and you've got much

26:48

bigger gold futures markets, much more sensitivity

26:50

to rates as a result historically.

26:53

And to your point, you can see in

26:55

the flows, there's been more

26:57

flows of generationally.

27:02

Western investors in particular follow performance.

27:04

Where culturally we are momentum

27:06

chasers. We don't buy assets that don't go up.

27:08

And if we have two assets going up, Americans

27:11

will almost always buy the

27:13

one that's going up faster. And so

27:15

it does have some momentum that feeds on itself.

27:17

It is partly a generational issue. And

27:20

so I think it's sort of a little bit all of

27:22

the above. Luke, let's

27:24

talk a little bit more about

27:26

these geopolitical conflicts, both Ukraine and

27:28

now Gaza. How do they play

27:30

into your overall thesis in the

27:32

dollar moving forward? Because as you

27:34

said earlier, I think we agree

27:36

that there's generally a trend that

27:38

these kinds of geopolitical conflicts are

27:40

dollar positive. As far as

27:42

I can see, these geopolitical conflicts are not

27:44

ending anytime soon. Looks to me like they're

27:47

getting worse. That would tend to

27:49

be not necessarily a disagreement

27:52

with your down dollar thesis,

27:54

but it's another macro overlay which maybe neutralizes

27:56

it at least for a while. Is that

27:58

how you see it? Or how do

28:00

you interpret the geopolitical outlook and what it

28:03

would mean for your dollar thesis? I

28:06

think it's always

28:08

a risk, right, that if you get

28:10

a severe escalation,

28:13

particularly given that what we're really talking about here

28:15

are proxy wars between the US

28:17

and NATO against Russia and

28:19

then also the US vis-a-vis

28:22

China in some way.

28:25

However, war is inflationary.

28:28

It's always inflationary. In a fiscal situation

28:30

in which the US

28:33

is in, the US doesn't

28:35

really have a choice. It wants to win

28:37

wars. It wants to support

28:39

its allies. It wants to pay its boomers to

28:41

make sure they vote for the right people in

28:43

November. And it wants

28:45

to fight inflation by raising rates. The problem

28:47

is that raising rates is inflationary when debt

28:49

to GDP is as high as your re-price

28:52

interest and you're basically pumping a trillion dollars

28:54

in interest into the economy, which is no

28:56

different than pumping a trillion in STEMIs. Four

28:59

years ago under COVID. Something's

29:01

got to give. And I think

29:04

ultimately it's going to be nominal GDP

29:07

and inflation. Ultimately,

29:12

we saw last fall that there

29:15

is a rate at which the

29:17

US Treasury market at the long end starts to

29:19

go sideways. And on the 10-year, that was around

29:21

5%. If

29:23

we continue with that as our working

29:26

assumption that above 5% drives

29:28

the Treasury market crash at the long end

29:30

and that is simply not going to be

29:32

abided for domestic

29:34

economic and geopolitical reasons, then we can

29:36

kind of say, all right, the

29:38

release valve is going to have to continue to be

29:41

the dollar. That's not to say it's going to crash.

29:43

But I think it's going to continue to... The more

29:45

we're involved in these conflicts, the

29:47

more that should put

29:50

downward pressure on the dollar. To

29:52

the extent they do heat up in a measured

29:55

manner, you saw Putin

29:57

today instruct Russian oil.

30:00

producers that he wants production cut to nine

30:02

million barrels a day by June. And

30:04

who knows? Maybe that's simply

30:06

the marking to market of the damage done by

30:09

these Ukrainian drones in Russia. I don't

30:11

know. At the end of the day, oil market doesn't

30:14

care. If Russia's going to take down oil production, oil's

30:16

going to go up, oil goes up. That's

30:19

another inflationary impulse. And again,

30:22

in the short run, if that causes

30:24

rates to go up, that can provide support for the

30:26

dollar. And no, there's

30:29

a rate at which the treasury market

30:31

dysfunctions. And when the treasury market dysfunction,

30:33

the dollar liquidity comes very, very

30:35

quickly. And so I think it's much more...

30:39

I don't know that unless there's

30:41

a huge escalation, rather

30:43

than a measured escalation, I think

30:45

it's more just more of the same of you'll have

30:48

these sort of what we've had since September 2022,

30:50

which is, okay, dollar gets 114, goes down, bounces

30:52

back up, and it goes back down, it bounces

30:54

back up. And it's sort of

30:56

lower lows, lower highs. That's I think the

30:59

war and geopolitical picture as it stands now

31:02

fits into that in my view. Look,

31:04

the other trend that is on the horizon,

31:06

or I should say upon us now, because

31:09

it's just over six months away, is the

31:11

presidential election. How do the

31:13

various potential outcomes of the presidential

31:15

election bear on your dollar thesis?

31:18

To me, I think they're broadly

31:20

supportive of a weaker dollar in

31:22

an organized manner. Because

31:25

when I look at what Trump did

31:28

when he was in office was effectively

31:30

kick off a move

31:33

toward US industrial policy, which is inflationary

31:35

and weaker for the dollar all is

31:37

equal, bigger deficits, et cetera. When

31:40

I look at what the Biden

31:42

administration is doing and

31:46

has professed to do, Jake

31:48

Sullivan and others, is

31:52

running industrial policy. And so to

31:55

me, I think there's

31:57

some difference in

31:59

the industry. policy, I think

32:01

Trump would be more likely to

32:04

classic fossil fuel old school

32:06

industrial policy. And I think

32:08

Biden would continue with this

32:11

green industrial policy, which

32:15

I don't think is necessarily the right thing to do,

32:17

but I think they're going through with it anyway. But

32:19

when I take a step back and I look at

32:21

it, I get industrial policy with

32:24

a guy who's kind of bluish

32:26

tides, or I get industrial policy with

32:28

a guy who's kind of senile at

32:30

times. But either way, I'm going to

32:32

get industrial policy, which to me I

32:35

think is ultimately supportive

32:37

of a lower dollar over time. Again,

32:39

not a dollar crash or anything, but

32:42

just continued organized managed decline in the

32:44

dollar in support of

32:46

that industrial policy that both candidates

32:48

seem to want to pursue in

32:51

slightly different directions. Luke,

32:53

let's translate the macro views

32:55

that you've expressed so far

32:57

in this interview into portfolio

32:59

construction guidance. I'm guessing based

33:01

on what you've said that you're probably long both

33:03

gold and Bitcoin. Why don't we start by confirming

33:05

that and then maybe tell us where the other

33:08

trades are that you see. Yes,

33:10

I really like Bitcoin. I really like gold.

33:12

I think they are going to continue to

33:14

do well. In

33:16

terms of other things, I

33:19

really like electrical

33:21

infrastructure related industrials.

33:24

Again, because I don't

33:26

care, they're generation agnostic. I

33:29

don't care if it's nuclear generation

33:31

or coal generation or

33:33

solar generation. I don't care. They

33:36

just need the wires and the equipment, etc. And

33:39

I have some investments there. I

33:41

hear the open field running and

33:43

electrical infrastructure. It's wide open

33:46

and open field running. I mean, you're out two

33:48

years on electrical generator, excuse me, on transformers,

33:51

electrical transformers just

33:53

now. And that's before we really

33:55

get into the electrical

33:57

transition or more industrial

33:59

policy. I like broad

34:01

US industrials. I think XOP, sort

34:03

of the oil services will continue

34:05

to be fine. I

34:08

don't want to be short, long bond

34:10

outright, simply because

34:13

it's entirely possible if we do

34:15

get the bank SLR exemptions that

34:17

the banks start funding at zero

34:19

to buy treasuries that they could

34:21

theoretically buy infinite amounts of, that's

34:23

good for rates. So it was really interesting to me. I

34:25

see Biden last week or two weeks ago say, hey, I

34:27

bet your rates are going to come down. I

34:30

think it's really interesting because my guess is they

34:32

didn't sit down with Biden, given

34:34

what sort of I've seen of his mental

34:36

state at times and tell him all about bank

34:38

SLR exemptions for treasuries and the bank of

34:40

international settlements talking about the use of bank

34:42

balance sheets for monetary policy and macroprudential policy. And

34:44

Chris Waller wants to shift to the front

34:46

end. I highly doubt someone sat down with

34:48

Biden and ran through all that. They probably sat

34:51

down and said, Mr. President, we're putting in policies

34:53

that are going to be great to come

34:55

down. And that's what he said on CNBC two

34:57

weeks ago. So that's

34:59

why I say I don't want to be short, long

35:01

bonds outright. I just kind of think they're like, eh,

35:05

you know, I would be underweight them

35:07

from a standpoint of if

35:10

I'm right on that view of what we've discussed

35:12

here, I think it's going to

35:14

be really good for nominal GDP growth. I think it's

35:16

going to be really good for inflation.

35:18

I think inflation is going to continue to

35:20

pick back up. I don't

35:22

think it's good for the dollar, but not

35:24

disastrously weak for the dollar or just sort

35:27

of down in an orderly basis. And

35:29

that's really good for global growth. I think

35:31

a really good setup for assets

35:34

broadly. And then it just comes down. So

35:36

I say I want to be underweight bonds.

35:39

They are a very suboptimal way

35:41

to play. Even

35:43

if yields come down, they're not going to go

35:45

up nearly as much as I think a lot

35:47

of these other assets that I own, that we

35:49

just talked to before will benefit from those trends.

35:52

Tell us your views on commodities

35:55

generally and specifically on copper vis-a-vis

35:57

your earlier comments about electrical infrastructure.

36:00

I like copper i think it

36:04

you need it and so i think

36:06

it's a good secular hold. Commodities

36:08

broadly i think we're in

36:11

the very early stages of

36:14

gold re becoming an oil and

36:16

commodity currency. Which is

36:18

to say. There's

36:20

a lot of people that will say will

36:23

the bricks there's never gonna

36:25

be a brick currency and nothing's ever

36:27

gonna replace the dollar. I

36:29

would say you're right and you're right. The

36:31

brick currency is gonna be gold and

36:33

what's gonna replace the dollar the reserve

36:36

level is gold and it is replacing

36:38

treasury ten years i think what we're

36:40

watching early stages in real time is

36:43

gold becoming an oil currency and gold

36:45

is much smaller. When oil

36:47

and commodity market so i think you know not even

36:49

i think if you call up

36:51

the charter of gold over oil or

36:54

gold over the crb commodity index you

36:56

know since russia world's biggest oil exporter

36:58

energy exporter for me. Began

37:01

reserving large amounts of gold in two thousand

37:03

eight. The price of gold the

37:05

nominated in the crb index is up almost

37:08

four x. I think

37:10

that trend will continue overtime you

37:12

know any any given month or whatever i

37:14

can reverse but i think overtime

37:16

gold is going to continue

37:18

to rise against every commodity

37:20

it will probably incoming as

37:22

the bricks. Roll

37:24

out more of their interest trade

37:26

i think gold.

37:30

Being used as their neutral reserve

37:32

asset as the quote unquote bricks

37:34

currency means that the price of

37:36

gold will go up. Faster

37:39

than commodities do in dollar terms

37:41

right so the come out of

37:43

the gold the crb ratio while

37:46

up for x and so i

37:48

think it will rise at a faster pace than

37:50

that over the next fifteen years and probably shorter

37:52

than that. Let's talk about energy

37:54

next seems like a one hand

37:57

we've got increasing spare capacity in

37:59

the oil. market so not a whole

38:01

lot of reason to get bullish until you

38:03

consider, boy, who knows what direction these geopolitical

38:05

conflicts are going to take next and anything

38:07

might be possible. Yeah,

38:10

I continue to think we're in a regime of peak

38:12

cheap oil, which is not this, you know, we just

38:14

say we're not running out of it. However,

38:17

we're going to need elevated

38:19

prices to keep US oil

38:21

online simply because

38:23

shale is so price

38:25

sensitive and it declines

38:28

so quickly if you shut it

38:30

off and price falls far

38:32

enough. We can look back to

38:35

2019 or 2020, excuse me, when we shut

38:37

down a bunch of production with COVID, we

38:39

got oversupplied price got too low. It

38:42

took four years. Late last

38:44

year, finally, US oil production

38:46

overtook its prior peak in 2019.

38:50

Geopolitically, that's really important because

38:52

if oil prices are

38:54

allowed to fall low enough, sustainably

38:57

enough, such that the

38:59

US starts to shut down

39:01

swaths of shale long

39:04

enough that US production rolls, we

39:07

have no credible ability as a nation

39:09

to raise production for two, three, four

39:12

years. And

39:14

said another way, that means we will

39:16

as a nation have ceded the global

39:18

oil market to Russia and to Saudi.

39:22

And so I think it is the oil market

39:26

in the short run is

39:28

increasingly politicized from the standpoint

39:30

that geopolitically, it's in the US's interest

39:32

not to let oil fall much below $70 a barrel.

39:35

And so I think we would do everything we

39:37

could to prevent that. And I think it's also

39:39

in the US's interest to prevent it from

39:41

going too far above 90 a barrel, simply

39:43

because we saw last fall, once oil hit $85, we

39:46

saw oil in the US. Oil

39:50

importing US creditors being forced

39:53

to sell treasuries to

39:55

buy dollars to buy oil. Japan

39:58

in particular, China to a lesser extent. And

40:00

so over 90 is bad for the

40:02

US, under 70 is bad for the US. And so

40:04

for me, I look at oil, I think

40:08

oil will probably continue to kind of be

40:10

a range bound commodity, 70 to 90, and

40:12

it gets good for XOP, right?

40:14

Because they got to run harder and harder to

40:16

kind of keep the production up. And

40:19

I think it's good for that gold to oil

40:21

ratio continuing to rise, as I mentioned, really,

40:25

as more oil basically gets settled in

40:27

gold instead of treasuries or US dollar

40:29

assets. But in terms of oil

40:31

itself, I don't have a strong view. I don't

40:34

think it's about the runaway and I don't think it's about the crash.

40:36

I think we're going to be range bound 70 to 90 for

40:39

the next six months, nine months at least

40:41

till the election. Well,

40:43

Luke, I can't thank you enough for a terrific

40:45

interview. But before I let you go, please tell

40:47

our listeners a little bit more about what you

40:49

do at Forest for the trees, what the website

40:51

is, URL, how they can follow your work. We

40:54

connect dots for our clients in a unique manner

40:56

trying to identify ways that

40:58

our clients can make money. So

41:00

for more information, they can find out,

41:03

check out our website, fftt-llc.com. You can

41:05

also look up my X

41:08

handle. I always call it Twitter handle,

41:10

sorry, Elon. My X handle is at

41:12

Luke Groman, L-U-K-E-G-R-O-M-E-N. Patrick

41:14

Suresna, Nick Galarnik and I will be

41:16

back as Macro Voices continues right here

41:19

at macrovoices.com. Now

41:27

back to your hosts, Eric Townsend

41:29

and Patrick Suresna. Eric,

41:35

it was great to have Luke back on

41:37

the show. Now joining us again in the

41:39

post-game segment is Nick Galarnik. Now let's get

41:42

to that chart deck. Listeners, you're going to

41:44

find the download link for the post-game chart

41:46

deck in your research roundup email. If you

41:48

don't have a research roundup email, that means

41:50

you have not yet registered at macrovoices.com. Just

41:53

go to our homepage, macrovoices.com and click

41:55

on the red button over Luke's picture

41:57

saying looking for the downloads. Let's

42:00

start by covering crude oil and the EIA

42:02

inventory. It was a

42:05

week of builds, Patrick, with crude

42:07

oil printing a 3.2 million barrel

42:09

build, Cushing, Oklahoma building 2.1 million

42:12

barrels, gasoline building 1.3 million

42:14

barrels, Distilitz was the only drawdown on

42:17

the board drawing down 1.2 million

42:19

barrels for a net petroleum build of

42:21

3.3 million barrels. US

42:24

production held steady at 13.1

42:26

million barrels unchanged, and that's

42:28

after plateauing at 13.3 million

42:30

barrels, which is also the

42:32

same level it plateaued at

42:34

before the pandemic began. Prices

42:36

are holding over $80, the round

42:38

number resistance level, as well as

42:40

the short-term moving averages, despite the

42:42

inventory builds. But they're still taking

42:44

their time in terms of the

42:46

rally not really having a whole

42:48

lot of juice behind it, and

42:51

that's consistent with the view that

42:53

the market is tightening slowly, but

42:55

plenty of spare capacity in the

42:57

Arab states prevents a really big

42:59

rally from taking off from here.

43:02

While oil's been relatively

43:04

range-bound for the last

43:06

week or two, when we

43:08

look at this chart on page two,

43:10

we can see that it's clearly been

43:12

accumulated over the first quarter of the

43:14

year. Higher highs, higher lows,

43:16

sustained price action above 50 day, and

43:19

while there's spare capacity and all sorts

43:22

of things that suggest that

43:24

oil doesn't have a huge upside,

43:27

I also think that there's a lot of

43:29

people positioned on the wrong side

43:31

of this trade, which could create a

43:34

short-term short squeeze. I

43:36

think at minimum we could see $85 on

43:39

the upside, but if the short squeeze

43:41

happens, we could see

43:43

the 90 handle on crude.

43:46

I don't think that's going to be sustainable

43:48

up there, but it will fit the narrative

43:50

of that trade range that Luke alluded to

43:52

in the interview. We get up

43:54

to 90 and then trade back down to 70, and

43:57

I think that right now in the short-term with

43:59

least way the price action continues, I

44:01

think higher for oil here makes a

44:03

whole lot of sense. So

44:05

let's move on to equities. I want to get Nick involved

44:07

in the conversation. Nick, what levels are

44:10

you watching on the S&P? Yeah,

44:12

Patrick. So right now the spot price on

44:14

SPX is approximately 52.50. We have

44:17

an implied move for the April 19th monthly

44:19

OPEX of 110 points. Therefore

44:22

the upper implied move is 53.60

44:24

and the lower implied move is

44:26

51.40. Right

44:28

now I'm inclined to think we see a bit

44:31

of a holding pattern until the April OPEX. Key

44:33

resistance is currently at 52.50 with key support at 52.00 and I think we kind of

44:37

sit in this narrow range over the next couple of

44:40

weeks until that OPEX passes by. You

44:42

know, on page four, Nick, I have

44:44

the S&P 500 chart with the 50-day

44:47

moving average, but really I should have

44:49

even put the 20-day moving average on

44:51

there because what's amazing is that this

44:53

rally's been so relentless that it hasn't

44:55

violated the 20-day moving average once

44:58

on any sustained basis since the

45:00

November breakout. And it just

45:02

really shows that the bulls

45:05

remain in control, higher highs,

45:07

higher lows, price action in

45:09

that favor. The next measured move, if they can

45:12

break this to a fresh high, the measured move is up

45:14

to 5,400. I

45:16

personally think that the fact that we got

45:18

up to this level without the rally being

45:20

checked, it's a big

45:22

surprise to me, but it doesn't change

45:25

my bigger view, which is that while

45:28

the bulls remain in control, the price action

45:30

in the trend is definitely your friend. I

45:33

still believe the upside is marginal

45:35

at this moment before some sort

45:37

of corrective pattern comes in. And

45:40

because of the level of complacency and the

45:42

amount of people that had to buy into

45:44

this rally, I think from a reflexive perspective,

45:47

a correction of at least 500 S&P points

45:49

is going

45:51

to inevitably come. But the fact is we've

45:53

been waiting for some sort of technical trigger

45:56

to show that a cell cycle has begun

45:58

and we're almost finished. the first quarter of

46:00

the year and not one has appeared. It

46:02

will be really interesting to see what happens

46:05

in those first few weeks of April. Nonetheless,

46:08

let's move on to the NASDAQ. What are you

46:10

watching on the Qs? Right

46:12

now, the spot price on Qs is approximately $4.45. We

46:15

have an implied move of 13 points

46:17

for the April monthly Op-Ex. Right

46:20

now, the upper implied move is $4.58 and

46:22

the lower implied move is $4.32. We

46:26

have key resistance right now at $4.50 and

46:28

key support at $4.30. Again,

46:30

as I said in past weeks, I'm

46:33

not so bullish on tech right now. I'm

46:35

more so bullish on the small caps and

46:37

I'm selectively bullish on certain names in big

46:39

tech right now, namely Apple and Google. Otherwise,

46:42

I'm pretty much waiting again in a holding

46:44

pattern until the monthly Op-Ex passes by and

46:46

thereafter we have the FOMC which should cause

46:48

involutility. What's interesting, Nick, with

46:50

your idea of the April Op-Ex is

46:52

it also will line up with the

46:54

pick in the Python moment of the

46:57

earnings releases and the earnings guidance being

46:59

given. It will be

47:01

interesting to see whether that becomes the

47:03

next inflection point as we move forward.

47:05

Nonetheless, let's touch on the VIX chart

47:07

on page 6. There

47:10

isn't much to say here, Nick. Ultimately, the

47:12

market has been rallying. Things are relatively calm

47:14

and complacent and the VIX has gotten down

47:16

to a 12 handle. It's

47:19

right down to the three month

47:21

lows and things are pretty

47:23

calm here. What levels are you watching here?

47:26

Yes, with the VIX at around 12 handle, when

47:28

you expect intraday top to bottom moves of

47:30

about 0.75%, not really much has changed in

47:32

the last week or so. We're seeing a

47:35

lot of complacency overall and as you mentioned

47:37

previously, if we do get that pullback eventually

47:39

of about 500 points on SPX,

47:41

that would mark about a 10% movement to the

47:43

downside which we saw actually last year. In

47:47

2023, we saw 2 10% pullbacks even

47:49

when we finished Europe plus 26% or so. It

47:52

can easily happen where we pull back down to 4800 from

47:55

the current level and the VIX would spike up to around

47:57

17, 18 handle perhaps. Right

48:00

now, no indication at all. I think

48:02

being selective in your approach as to

48:04

how you ensure your portfolio as to

48:06

expiration date wise on your purchasing of

48:08

puts as well as the strategy you're

48:10

using, put spreads versus straight puts for

48:12

example, is very, very important. But right

48:14

now, insurance is very, very cheap and

48:17

it would be wise to perhaps either take some

48:19

off the table if you're overly long or if

48:21

you want to hedge your portfolio overall. Now

48:24

moving on to page seven, we have the US dollar index.

48:26

Eric, what are your thoughts here? Well,

48:28

we had two consecutive closes over 104

48:31

on the Dixie on Tuesday and Wednesday. If

48:34

that was it and it stops here, okay, fine.

48:36

This is a logical place for a top. It's

48:38

where the last cyclical top

48:40

was if we're just in a consolidation pattern.

48:43

But if we get a daily close

48:45

over 104.5 or a little higher than

48:47

that, whatever the previous high

48:50

was from a month or so ago,

48:52

that would suggest that we might be

48:54

starting a new leg even higher. So

48:56

is this a sideways consolidation or are

48:58

we starting a leg higher? That's really the question

49:00

to ask and the answer, at least

49:02

a clue to it, should come from whether or

49:05

not we get a daily close over 104.5 in

49:07

coming days. Eric,

49:10

I actually think that this dollar strength

49:12

is something that can't be ignored. The

49:15

euro is breaking down below 108. You

49:19

have a yen that is right along

49:21

the US dollar yen that's up along

49:23

the 152 level. And

49:26

if all we need is a little push off

49:28

the cliff and we've got ourselves a US

49:31

dollar bull trend, this

49:33

in my mind has all of the

49:35

makings of a short term breakout and

49:38

not many people are talking about this.

49:40

Now does that mean that there's a big

49:42

extraordinary run where we're going to see 110 or 114

49:44

on the

49:46

dollar index? No. Or at

49:49

least too early to speculate. But

49:51

at this stage, if we see this

49:53

continue, there's no reason why we ain't

49:55

retesting the October highs near 107 on

49:57

the upside. I

50:00

think that this is the chart to watch. Moving

50:02

on to page 8, we have that Gold Teachers chart

50:05

which is making new highs. What are your

50:07

thoughts here? Gold is performing

50:09

incredibly well. It's holding up and

50:11

just printed a new all-time high

50:13

close on Wednesday and that's despite

50:15

the strengthening US dollar. That

50:18

strength despite dollar strength portends more strength to

50:20

come. I think we are headed at least

50:22

to 2300. That's

50:24

probably a good place for the market to take

50:26

a breather and retrace a little bit. But ultimately,

50:28

I think we are probably headed higher than that.

50:32

2725 is the target for the long-term Cup and Handle

50:34

pattern. I don't know if that's going to happen this

50:37

year but I think that by the time we get

50:39

to the election in November, we are going to be higher

50:41

than just 2300. Let's see what

50:43

the market gives us. Eric, I have to

50:45

agree with you. The fact that the US dollar

50:47

is strong and looking like it's breaking out and

50:49

gold just continues higher, there has to

50:52

be something to that. The targets

50:54

from last week when you and Ola Hansen

50:56

were talking about 2300 are still very much

50:59

in play. I'm a little bit

51:02

surprised at the strength but at this

51:04

moment, there's no reason not

51:06

to remain bigger picture bullish. The bigger

51:08

question in my mind is this the

51:11

breakout that sees those really big bull

51:13

impulses that could see 2700 plus

51:16

or is this simply just a

51:18

quick move and then we're going

51:20

to spend many months consolidating once we

51:22

hit the upper boundary of a

51:24

short-term range. Nonetheless, the pattern of higher

51:27

highs, higher lows is

51:29

still in place and the bulls are in control

51:31

so we have to play that way. I wanted

51:33

to move on to page 9 where I just

51:35

wanted to touch on the silver chart but what

51:37

I did here is I put the weekly chart

51:39

so I could capture at least five years of

51:41

price action. While gold has

51:43

been trading at an all-time

51:45

high, silver has yet to join the

51:48

party. At this

51:50

moment, we're going to watch

51:52

closely whether or not this can

51:54

actually bullishly follow through. I think

51:56

silver, while it's not an asset

51:58

that is actively accumulating. by

52:00

central banks. Inevitably, as gold

52:03

is Most

52:23

of the uranium mining charts suggest that

52:26

the bottom is probably already in, but

52:28

the recovery off that bottom has been

52:30

sluggish at best. When something really is

52:32

a bottom, the market doesn't usually give

52:34

you multiple chances to buy it at

52:36

that level, which we did get this

52:38

time. That tells me that there's still

52:40

room for another leg lower, although we're

52:42

not seeing it in the charts quite

52:45

yet. Maybe that's just wishful thinking on

52:47

my part because I was hoping for

52:49

that leg lower to buy more shares

52:51

because I'm still uber bullish long-term. I

52:53

think the spot market and the term

52:56

market are disconnected in a way that's

52:58

confusing a lot of people. Justin Huen

53:00

over at uraniuminsider.com has done a lot

53:03

of analysis on that. We're working on

53:05

getting Justin back in coming weeks here

53:07

on Macro Voices. Eric, I

53:10

generally look at it the same way you

53:12

do. To me, and when I look at

53:14

this chart of the Sprott Physical Uranium Trust,

53:16

to me it needs a legitimate

53:18

breakout north of $30 to demonstrate

53:20

that the bulls are actually putting

53:23

together a new bull sequence and

53:25

it's off to the races again.

53:27

The fact that we've bounced and

53:29

it's just consolidating along its 50-day

53:31

moving average, to me leaves

53:34

the window open like you're suggesting that there

53:36

could be still one more

53:38

dip. But overall, even if the

53:40

Sprott Physical did dip one more time, let's

53:42

say a quick drop to $25, I still

53:44

believe it's a compelling buying

53:48

opportunity. After a 9

53:50

plus month run, expecting a 2 to 3

53:52

month market correction that

53:54

gives back half of its gains

53:56

is a very typical type of

53:58

price action move. And so

54:00

this doesn't change the bigger bullish picture.

54:03

It's simply about just trying to size

54:05

up what is clearly a

54:07

mean reverting profit taking correction, how deep

54:09

does it go, and where does the

54:12

next bull trend really begin. Folks,

54:14

if you enjoy Patrick's chart decks, you can get

54:16

them every single day of the week with a

54:18

free trial of Big Picture Trading. The details are

54:20

on the last pages of the slide deck, or

54:23

just go to bigpicturetrading.com. Patrick,

54:25

tell them what they can expect to find

54:27

in this week's Research Roundup. Well, in this

54:29

week's Research Roundup, you're gonna find the transcript

54:31

for today's interview and the chart book we

54:33

just discussed in the postgame, including a link

54:35

to a number of articles that we found

54:37

interesting. So you're gonna find this and so

54:39

much more in this week's Research Roundup. Well,

54:43

that does it for this week's episode. We appreciate

54:45

all the feedback and support we get from our

54:47

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54:49

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